15 Jan Dancing On The “Debt” Ceiling
We have just avoided the US “Fiscal Cliff’ & my kids will think this is funny as I roll out another 1980′s tune from Lionel Richie, but now we are really Dancing on the Debt Ceiling.
I find this all a bit comical as I was in the USA in April last year when the negotiations at that time over the debt ceiling created the fiscal cliff at the end of 2012.
What Is the Solution ?
Negotiation !!! President Obama has recently been returned to office, but the US parliamentary system faces similar challenges politically as does Australia. The Democrats (Labor values in Australia) are the ruling party but cannot pass all their laws through Congress which has been controlled by the Republicans (Liberal values in Australia)
General opinion that some deal over raising the debt ceiling will be struck, but not before likely significant political posturing by both sides of US politics (Democrats vs Republicans). This “sabre rattling” may continue on through December right up to the 11th hour based on past form – either way I don’t see some sort of deal not being completed (not that I know more than any other commentator, economist, etc.), but I can’t see the Americans voting against themselves
Just yesterday US Federal Reserve chairman Ben Bernanke has urged US lawmakers to lift the country’s borrowing limit to avoid a potentially disastrous debt default, warning that the economy is still at risk from political gridlock over the deficit.
Likening Congress to a family arguing that it can improve its credit rating by deciding not to pay its credit card bill, Mr Bernanke said that raising the legal borrowing limit was not the same as authorising new government spending.
“It’s very, very important that Congress takes the necessary action to raise the debt ceiling to avoid a situation where our government doesn’t pay its bills,” he told an event sponsored by the University of Michigan.
The US Treasury says the country bumped into its borrowing limit on December 31, and it is now employing special measures to enable the government to meet its financial obligations.
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US leaders did agree at the beginning of January to extend tax cuts for all American families earning less than $US450,000 a year to avoid a portion of a “fiscal cliff” of policies that Bernanke had warned would likely tip the economy into recession.
But lawmakers must still navigate the debt limit as well as thrash out a deal over drastic automatic spending cuts that were postponed until March 1.
What About a Bipartisan approach ?
Certainly a novel idea. I remember going to a presentation in the early 1990’s regarding superannuation & the government’s retirement income policy. Speaking at the presentation was a liberal senator (who were in opposition at the time). When asked why don’t the government & the opposition take a bipartisan approach to super & retirement savings, the liberal senator replied: –
“We are all for a bipartisan approach, as long as they are liberal ideas !!!!!”